It appears to be a height issue.
When I use the default size 440 x 300 the 2nd row staggers 3 items to 3rd row.
When I use the thumbnail size 245 x 245 the 2nd row staggers 3 items to 3rd row.
When I use the feature-small size 340 x 140 the 2nd row populates correctly with all 4 images.